Bloomberg reports that US mortgage rates have reached their highest level since 2000.
Mortgage rates in the United States reached their highest level since November 2000, topping 7.5% last week. This has resulted in a dramatic drop in home purchase applications, which are presently at a multi-decade low. Mortgage rate increases, combined with high property prices and limited availability, have contributed to one of the most expensive housing markets on record.
Mortgage rates in the United States reached 7.5% last week for the first time since November 2000, while house purchase applications fell to a multi-decade low, indicating a battered housing market.
According to Mortgage Bankers Association data released Wednesday, the contract rate on a 30-year fixed mortgage increased by 12 basis points, the most since mid-August, to 7.53% in the week ended Sept. 29. The home-purchase application index decreased 5.7% to 136.6, the lowest level since 1995.
The total number of mortgage applications, which includes refinancing activity, fell 6% to the lowest level since 1996.
Since early last year, the housing market has borne the brunt of the Federal Reserve’s relentless interest-rate hikes.
Bond rates have recently risen in anticipation that the Fed’s policy rate will remain higher for a longer period of time due to the economy’s resilience.
Borrowing prices have risen so far this week, with the 30-year fixed mortgage rate reaching 7.72% on Tuesday, according to Mortgage News Daily, which updates more regularly.
Higher mortgage rates and rising home prices, owing in part to a scarcity of available homes, are contributing to one of the most expensive housing markets on record.
With a healthy labor market continuing driving consumer spending, Fed officials have signalled that they will maintain interest rates high for the foreseeable future — and may well deliver another rate hike before the end of the year — in an effort to permanently contain inflation.
Since 1990, the MBA poll has used responses from mortgage bankers, commercial banks, and thrifts. More than 75% of all retail residential mortgage applications in the United States are covered by the data.